from the this-is-not-a-good-trend dept

In 2009, we wrote about the city of Bozeman, Montana asking job applicants for all of their passwords to social networking sites, so that the city could look more closely to see if they had "high moral character." Public outrage over that plan resulted in the city dropping the requirement. Last year, we noted that some places in Maryland were doing the same, leading to a lawsuit. However, the Boston Globe is now reporting that more and more jobseekers are being asked for their social network logins, as a simplified "background check" by employers. It's a newspaper trend piece, so in typically maddening fashion it makes no effort to indicate how widespread this really is -- but the fact that it's not a big story any time an employer does this certainly suggests that it's becoming at least somewhat more standard.

Still, does that mean we should pass a law? Senator Richard Blumenthal -- who has long been in favor of laws against all kinds of internet companies -- is apparently working on exactly that kind of legislation. Somehow, I doubt it's an accident that the Boston Globe trend piece came out at about the same time as Blumenthal's plans were discussed. Frankly, I still think that it's pretty sketchy and questionable for companies to ask for logins, but is it so bad that we need a law? Is there at least some sort of data on how widespread this practice is?

In the meantime, for those interviewing for jobs who do get asked for such things, it seems only proper to respond as the first individual profiled in the original article does—by walking away:

Bassett, a New York City statistician, had just finished answering a few character questions when the interviewer turned to her computer to search for his Facebook page. But she couldn't see his private profile. She turned back and asked him to hand over his login information.

Bassett refused and withdrew his application, saying he didn't want to work for a company that would seek such personal information.

I would still guess this isn't quite as common as the article tries to suggest, but either way I'm curious if people feel this practice is so egregious that it needs a new federal law?

from the evidence-based-policy-making dept

A key element of the political rhetoric around SOPA/PIPA was the idea that it was about jobs, and that jobs are so critical in the current economic climate that safeguarding them overrides any other concern the Net world might have about the means being proposed to do that. But then the key question becomes: who are really more important in terms of those jobs - the copyright industries, or companies exploiting the potential of the Internet that would be harmed if the Net were hobbled by new legislation?

The Internet is a critical element of growth. Both our macroeconomic approach and our statistical approach show that, in the mature countries we studied, the Internet accounted for 10 percent of GDP growth over the past 15 years. And its influence is expanding. Over the past five years, the Internet’s contribution to GDP growth in these countries doubled to 21 percent.

The latest information (pdf) from the International Intellectual Property Alliance (IIPA) claims the GDP contribution from the "core copyright industries" in the US in the years 2007-2010 went from 6.43% to 6.36% - that is, its contribution to the overall GDP was largely unchanged over this period. So the contribution of the "core copyright industries" to GDP growth over this period was also around 6%. The "core copyright industries" are defined as follows:

The core industries are those industries whose primary purpose is to create, produce, distribute or exhibit copyright materials. These industries include newspapers and periodicals, motion pictures, recorded music, radio and television broadcasting, and computer software.

That is, they include software companies, some of which are doubtless active on the Internet. So the contribution of the non-Internet core copyright industries to the GDP growth from 2007-2010 was less than the 6% figure above. That compares with an overall contribution of the Internet to GDP growth in the mature countries as a whole of 21% (but over five years, not four).

So what about the jobs? Here's McKinsey again:

The Internet is a powerful catalyst for job creation. Some jobs have been destroyed by the emergence of the Internet. However, a detailed analysis of the French economy showed that while the Internet has destroyed 500,000 jobs over the past 15 years, it has created 1.2 million others, a net addition of 700,000 jobs or 2.4 jobs created for every job destroyed. This conclusion is supported by McKinsey’s global SME survey, which found 2.6 jobs were created for every one destroyed.

Again, the IIPA report offers some figures:

the core copyright industries employed 5,496,100 workers in 2007. These workers represented 3.99% of the total U.S. workforce in 2007. By 2010, the number of core copyright employees in the United States had declined by 398,500 workers to 5,097,600.

In an earlier report (pdf), the number of people employed by the core copyright industries in 2002 is given as 5.48 million – roughly the same as in 2007. That is, whether or not the numbers are really representative, there was a net decline in the workforce of the "core copyright industries", which include software and probably some Internet companies, from 2002 to 2010.

By contrast, in France, whose population is roughly a fifth of that of the US, the Internet created some 700,000 jobs net. That was from 1995, but in the early years it is likely that relatively few jobs were created by the then-new Internet, so most of those 700,000 would have been created later on - say 400,000 for the last eight years. In the US, we might expect at least a pro rata number – 2.4 million jobs. That's probably an underestimate, since the US is in the Net vanguard, but even if it's an overestimate, the figure is likely to be much better than the net loss of the core copyright industries.

If the backers of SOPA and PIPA were really as concerned about jobs as they profess to be, they would be doing everything in their power to defend the Internet so as to preserve this incredible engine of growth, not attack it. And they would be pushing the copyright industries to embrace the Internet as rapidly and completely as possible, since the McKinsey report also points out:

Although the Internet has resulted in significant value shifts between sectors in the global economy, our research demonstrates that all industries have benefited from the Web. Indeed, in McKinsey’s global SME survey, we found that 75 percent of the economic impact of the Internet arises from traditional companies that don’t define themselves as pure Internet players. The businesses that have seen the greatest value creation have benefits from innovation leading to higher productivity triggered by the Internet.

Sounds like a perfect solution: instead of fighting the digital revolution tooth and nail, the copyright industries could embrace it like everyone else, stop demanding to be treated like a special case, and start innovating.

from the oh-please dept

Okay, the lies and ridiculous claims from SOPA/PIPA supporters just keep getting more and more ridiculous. On a panel at Sundance about the whole SOPA/PIPA issue, it appears that John Fithian, president/CEO of the National Association of Theatre Owners (NATO), was able to sound even more tone-deaf and out of touch than the MPAA's Chris Dodd! That's really saying something these days. Let's start with this:

NATO’s Fithian said he had never witnessed such a reversal in momentum considering the legislation’s passage seemed all but assured in October. "This was the most amazing turnaround of public opinion in the 25 years I’ve been a professional lobbyist. We were up there since Day One and took 25 of my [exhibitor] CEOs and met with 50 members of Congress. We asked each member of Congress if there was anything they need to make the legislation clear and nobody said anything. Google read the legislation at the same time and didn’t say a word. But in November the greatest backlash ever occurred."

First of all, Google had been complaining publicly about the bill since it was introduced in the Senate back in May. For Fithian to claim that the company had no complaints in October is simply laughable. As for questions from legislators, the fact that they didn't have any questions isn't a point in your favor, it's a sign of just how corrupt the system is. When Hollywood hands them a bill, they don't bother taking the time to understand it until after the public speaks out on it.

Fithian went on, "The backlash occurred, Google made its point, they’re big and tough and we get it. Hopefully now reasonable minds will prevail. Senator Dodd and his team are quite good at this. We’ll sit down with them and ask what has to be done to make legislation more narrowly tailored...."

And here's the sign that they really just don't get it. They still think that this was all Google. While Google did speak out publicly against the bill early, it had almost nothing to do with the protests that erupted last week, and only jumped on board very late in the game. You wouldn't believe how much complaining there was in various online communities about just how little Google was doing to fight this bill. The idea that this was driven by Google is laughable to anyone who was involved in these events. 14 million people spoke up about this bill. That wasn't Google. That was the wider internet. Pretending that this was Google flexing its muscles shows that this is someone who still isn't paying attention.

"But the reality is we have to stop these rogue websites. They’re stealing jobs from my members. It’s not Senator Dodd’s big wealthy studio executives, it's the 160,000 Americans who earn on average $11 an hour at my cinemas. Those are the jobs at stake.”

Almost nothing in this statement is true. As we discussed recently, employment at theaters has been dropping rapidly over the last decade. It peaked in 2003, but has steadily trended downward since then. Over that same time period, however, box office revenue has continue to rise at a pretty significant clip, setting new records almost every year until 2011, when it finally took a slight dip -- which many people attribute more to the crappy experience at theaters. You know why there might be a crappy experience? Because the theater owners that Fithian represents consolidated, built up giant, impersonal multiplexes, and then completely understaffed them.

Furthermore, $11/hour is hardly a living wage these days, and a large percentage of folks working at movie theaters aren't full time/lifetime employees, but high school kids looking to earn some extra beer money.

Either way, there is simply no evidence -- at all -- that "foreign rogue sites" have had any impact whatsoever on theater employment. As theater revenue continued to go up and up and up, theaters were firing more and more employees in an effort to cost-cut. Even the MPAA folks have repeatedly claimed that infringement has little to do with theater revenue and is almost entirely (in their minds) about in-home revenue (the same revenue stream the MPAA wanted to kill off 30 years ago in the Betamax case).

So it's difficult to see how anyone can take Fithian/NATO seriously. He claims that it was just Google. It was not. He references jobs in theaters, which have nothing to do with any of this. He claims that Google wasn't concerned about the bill. Is he saying anything that is backed up by fact? Well, perhaps the bit about our elected officials being too clueless/unconcerned to actually understand the bill that Hollywood handed them. That part is believable...

Amusingly, in another article about the same panel, it mentions that even Fithian's son was against him on this issue, and agreed with the anti-SOPA/PIPA folks. Also, it shows the real thinking on Fithian's part. It's not "piracy" he's concerned with, it's any form of competition whatsoever. Apparently during a discussion on the best way to compete with infringement, some people suggested the studios supplying "more content in new, affordable avenues to undercut the temptation to" infringe. Not only does that seem reasonable, but it's the only thing that's actually been proven (repeatedly) to work. But Fithian dismisses anything that would compete with theaters -- mocking both Netflix and Redbox as "bad business models." In other words, Fithian is making up anything he can... solely to act as protectionist as possible for a bunch of theater owners who don't want to adapt or compete. Perhaps he should take a lesson from the MPAA: being obstructionist against innovation is not a strategy for success.

from the say-what-now? dept

In a short appearance on Meet the Press on Sunday, Senate leader Harry Reid continued to insist that the Senate intended to move forward with PIPA, despite the widespread concerns, despite the White House's statement against the bill, and despite multiple Senators -- including bill co-sponsors -- asking him to hold off putting the bill to a vote.

What's stunning is how misleading Senator Reid is being here. First, he claims that the bill is about "jobs," despite a total lack of evidence that that's true. In fact, as has been noted plenty of times here, the part of the economy that is creating jobs -- the startup/tech sector -- is the one who gets burdened by this bill. David Gregory then responds by pointing out that people keep pointing out to him online that this bill isn't really about jobs, and will harm the internet. Reid then tries to pretend that this is a new revelation. He notes that it was "reported out of the committee unanimously" back in May. That's true, but that was back before most people understood the bill, or the internet had spoken out. Even then, many of us were quite clear in speaking out about why this bill was a problem. But Harry Reid pretends that it's "just in the last few weeks" that anyone has raised concerns." That's flat out ridiculous.

Next he claims that he's working with Senator Feinstein on this, since she's "in the middle" of the issue, representing both Northern and Southern California, where the issue is loudest. This would be the same Senator Feinstein who is so tone deaf to what's happening in her own state, that just weeks ago she insisted that she didn't know the tech industry was upset about the bill.

But the really stunning part? After these bizarre claims, he says, of those who have complained about the bill:

"I think they're right. I think it could create some problems. That's why I've spoken Senator Leahy, the Chairman of the Committee. I've written a letter to the ranking member Senator Grassley, saying that some issues have come up. I think this needs to be a winner for everyone -- not just for the content people.... so we need to work on this."

But then he still insists that they're going forward with the bill! He notes that he's expecting a "manager's amendment" from Leahy -- but Leahy has already said that the manager's amendment is just going to delay the implementation of the DNS issues. If Senator Reid really wants to make sure the bill is a "winner for everyone" then shouldn't we take some time to make sure that everyone's happy? It's doubly concerning that he appears to think these issues "just came up" in the past few weeks. That shows that he's totally and completely out of touch on the many months that people were speaking out against the problems of this bill. If anything that's even more reason to delay things, since Reid himself is admitting he's totally ignorant of the many, many, many problems that people have been discussing for months now.

It's such a politician's response: he pretends that he's in agreement with the concerns of everyone... but then immediately admits he's ignoring those concerns and pushing forward with a bad bill, which he clearly never understood, and which it appears he just found out there was criticism around, despite the fact it's been going on for months. Everything in this statement points to reasons not to vote on the bill on the 24th, and yet he wants to move forward with it. It's just stunning.

from the data,-data,-data dept

We hear it all the time: the entertainment industry legacy players insist that the world is ending, jobs are going away, and that they need new laws like SOPA and PIPA or it's all over. That's why SOPA & PIPA are being positioned as jobs bills. Especially popular are the major labels and the big Hollywood studios insisting that they're really doing this not to save their own companies from having to adapt, but to protect the poor, poor indie creator, who is totally being destroyed by those evil online pirates. We hear time and time again about how it's really the "indie" folks who are being decimated.

Funny thing: reality says otherwise.

The Bureau of Labor Statistics (BLS) has some pretty nice tools and a neat table of jobs in various industry sectors in 1998, 2008 and then projected in 2018. Let's take a look at the entertainment industry, shall we?

Why yes, that does show that the industry grew nicely from 1998 to 2008... all the while we were being told it was being decimated by piracy and no one could find work any more. Oh, and check out that last line. Independent artists, writers and performers jumped from 35.2k in 1998 to 50.4k in 2008 -- the first decade of real mainstream internet infringement (Napster arrived in '99). If you're not quick with the percentages, that's a pretty astounding 43.2% growth rate. And, it appears the BLS continues to think that jobs in that sector are going to grow over the next decade as well. Damn those pesky facts.

Of course, for those of us who have been following/reporting on this for pretty much all of that time, this isn't surprising at all. What we've seen is an explosion in opportunities for independent artists. Before all of this happened, it was much more difficult to be an indie artist, because the major labels and studios really were the gatekeepers. It was almost impossible to succeed without them. These days, however, it's become a choice, and there are so many ways to succeed that don't require the majors. It's no wonder that many more people are making a living as an indie artist than ever before.

from the not-good dept

We've talked, in the past, about the paradox of job creation by the government. Too often the government acts as if "job creation" is about propping up or subsidizing big companies, hoping that they'll hire lots of people. And, intuitively, you can see the appeal there for two reasons. First, it's much easier to think that Giant Telco A will likely hire another 5,000 workers to dig ditches if the government gives them a bunch of money, than it is to think that random startup A will hire 5,000 people. Second, often the disruptive innovations that actually do create economic growth and jobs comes at the expense of legacy companies in older industries. And the fear there is always job losses. So, some new startup comes along with a technology that makes life more efficient and makes stodgy old legacy company obsolete... and upfront you're going to see job cuts at the legacy company, even if the end result is many more jobs (and greater economic efficiency).

But the truth is that if the government wants to really create new jobs, it needs to support the startup ecosystem. Research from the National Bureau of Economic Research (NBER) and the US Census Bureau last year found that startups really are the key to both gross and net job growth. So if the government really wants to encourage economic growth and new jobs it should be focused on making sure the startup ecosystem is strong and vibrant. Unfortunately, that doesn't appear to be the case. When we see proposals like SOPA, which will hinder startups by placing tremendous liability on them and scaring off investors, we get worried.

This does not bode well for the US economy or for job growth. For innovation to thrive, we need the creative destruction and economic and job growth brought about by startups and entrepreneurs. We don't get that when the government is "captured" by the large legacy players who are only focused on "protecting" and defending their turf, rather than fostering innovation, growing the economy and creating jobs.

from the let's-dig-in... dept

One of the things we've noticed in the debate over SOPA and PIPA is just how the other side is really lying with statistics. We've done a thorough debunking of the stats used by the US Chamber of Commerce to support both bills, as well as highlighted the misleading-to-bogus stats used by Lamar Smith in his support of the bill.

First off, the $58 billion comes from an absolutely laughable report for the Institute for Policy Innovation, done every year by Stephen Siwek at a firm called Economists Incorporated. We've challenged this ridiculous number in the past, but not to the level of detail that Sanchez has here. He starts out by bringing up (as we have many times), Tim Lee's excellent debunking of the ridiculous "ripple effects" that Siwek/IPI always use, despite them being a trick to double, triple, quadruple, etc count the same dollars:

In IPI-land, when a movie studio makes $10 selling a DVD to a Canadian, and then gives $7 to the company that manufactured the DVD and $2 to the guy who shipped it to Canada, society has benefitted by $10+$7+$2=$19. Yet some simple math shows that this is nonsense: the studio is $1 richer, the trucker is $2, and the manufacturer is $7. Shockingly enough, that adds up to $10. What each participant cares about is his profits, not his revenues.

It turns out that the $58 billion comes from this process, making use of a dubious multiplier on a different MPAA report that claimed merely $6.1 billion in losses for the US movie industry, multiplied to about $20 billion -- as the portion of the "losses" that come from movies. But, as Sanchez notes, that number itself is highly questionable:

Okay, but even if we assume that $6.1 billion is accurate, Sanchez explains how that's not even what's at stake with SOPA, since the $6.1 billion is a global number:

Believe it or not, though, it’s actually even worse than that. SOPA, recall, does not actually shut down foreign sites. It only requires (ineffective) blocking of foreign “rogue sites” for U.S. Internet users. It doesn’t do anything to prevent users in (say) China from downloading illicit content on a Chinese site. If we’re interested in the magnitude of the piracy harm that SOPA is aimed at addressing, then, the only relevant number is the loss attributable specifically to Internet piracy by U.S. users.

Again, we don’t have the full LEK study, but one of Siwek’s early papers does conveniently reproduce some of LEK’s PowerPoint slides, which attempt to break the data down a bit. Of the total $6.1 billion in annual losses LEK estimated to MPAA studios, the amount attributable to online piracy by users in the United States was $446 million--which, by coincidence, is roughly the amount grossed globally by Alvin and the Chipmunks: The Squeakquel.

Okay. So now we're down from $58 billion to... $446 million. That's less than 1% of the original number. But, still, you might say, $446 million is a fair chunk of change (and the $58 billion doesn't just include movies, but other content, like music and software). So perhaps something like SOPA still makes sense to protect a few jobs? Nope. Again, Sanchez points out how this ignores reality:

As one expert consulted by GAO put it, “effects of piracy within the United States are mainly redistributions within the economy for other purposes and that they should not be considered as a loss to the overall economy.” In many cases--I’ve seen research suggesting it’s about 80 percent for music--a U.S. consumer would not have otherwise purchased an illicitly downloaded song or movie if piracy were not an option. Here, the result is actually pure consumer surplus: The downloader enjoys the benefit, and the producer loses nothing. In the other 20 percent of cases, the result is a loss to the content industry, but not a let loss to the economy, since the money just ends up being spent elsewhere. If you’re concerned about the overall jobs picture, as opposed to the fortunes of a specific industry, there is no good reason to think eliminating piracy by U.S. users would yield any jobs on net, though it might help boost employment in copyright-intensive sectors.

In other words, we're right back where we started. The whole thing is based on the bogus assumption that money not spent on movies (which, again, have been making a ton of money lately) somehow disappears from the economy. But that's simply not true. So, really, why is it that anyone in the press, or in elected office, is allowed to quote that bogus $58 billion number without it being challenged?

from the oh-look-at-that... dept

One of the key talking points that the movie industry likes to bring up concerning the reason it wants SOPA and PROTECT IP is that it has to "protect jobs." In a recent talk by the MPAA's Chris Dodd, he once again talked up how many jobs were being "lost" in the movie industry. First, he pulled out the industry's favorite 2.2 million number, which is clearly bogus. As we noted earlier in the week, new research from the Congressional Research Service shows that the movie industry actually employs 374,000, making the claim (pulled from the highly questionable Institute for Policy Innovation) that the industry is losing 373,000 jobs each year... kinda questionable.

But I wanted to get a better understanding of what was actually happening to jobs in and around the motion picture industry. Seeing as CEOs of the major studios continue to bring in record salaries, it certainly sounds like the industry isn't doing that bad. Thankfully, research firm IBISWorld digs pretty deep into different industries to separate out what's happening. After digging through the numbers, it looks like the MPAA is (yet again) being intellectually dishonest.

If you look at the jobs in actual movie production -- the kind that they always imply are most at risk -- it turns out those jobs are growing rapidly. In 2002, there were about 43,000 people employed in the actual production of movies and videos. In 2010? That number had jumped to 77,000. Not bad. So where are the few job losses coming from? Well, there are about 1,500 fewer jobs in "movie and video distribution," but that makes sense, since technology is making that area less important. Really, the only place in the industry that has seen a significant loss in jobs (and even then it's not that big) is in the movie theater business. Employment in movie theaters dropped from about 134,000 in 2002 to about 119,000 in 2010. That accounts almost entirely for the drop in total employment in the movie business from 392,000 down to 374,000 that the CRS report noted.

In other words, the only "significant" job losses that we can spot are coming from the theaters themselves -- and it's difficult to see how that's got much, if anything, to do with piracy. As was noted in the CRS report, box office revenue has continued to hit records every year. So, really, it looks like theaters may just be cutting staff to cut costs, but that revenue at the box office keeps getting higher. So, more money with fewer staff. That's not exactly a story that shows an industry decimated by piracy.

from the first,-do-no-harm dept

I'm sure the prisoners welcome their new robot overlords, but I bet the prison guards union doesn't. Or any other union for that matter. And they're not alone. Over the past few weeks, tech industry commentators spent slightly more time than usual wringingtheirhands over whether technology was killing jobs. I think this video captures the debate pretty well.

It might sound paradoxical, but this replacement of humans by machines is actually a good reason to limit secondary liability for the robotics industry. And I'm not just referring to secondary liability in the copyright sense, but to any liability incurred by robot manufacturers because of how others use their robots.

This isn't a theoretical issue. Automation and efficiency have always threatened certain jobs and industries -- and one of the standard reactions is to somehow blame the technology itself and seek to hinder it, quite frequently by over-regulation. Of course, the extreme version of this is where the term "luddite" came from -- an organized effort to attack more efficient technology. Of course, that resulted in violence against the machines. More typical were overly burdensome regulations, such as "red flag laws," that said automobiles could only be driven if someone walked in front of them waving a red flag to "warn people" of the coming automobile. Supporters of this law, like supporters of secondary liability laws for robots, can and will claim that there are "legitimate safety reasons" for such laws and that the impact on holding back the innovation and extending the lifetime of obsolete jobs is just a mere side benefit. But like those red flag laws, applying secondary liability to robotics would significantly hinder a key area of economic growth.

Technology has been replacing human labor since humans invented, well, technology. But while technology may get rid of inefficient jobs, it eventually creates replacements. To cite one commonly-used example, the switched telephone network put operators out of a job, but it created plentiful new jobs for telemarketers (and other businesses that relied upon the packet-switched phone network... including everything built on and around the internet today). The problem is that while it was obvious how many operators would be out of a job, it wasn't immediately clear how lucrative (or annoying) telemarketing could be, let alone the eventual transformation of the phone lines into a vast global information sharing network, and the hundreds of millions of new jobs created because of it.

Erik Brynjolfsson and Andrew McAfee examine this problem in detail in their book, which I recommend. But much of it boils down to this. Technology creates jobs, yet it's not obvious where the new jobs are, so we need bold, persistent experimentation to find them:

Parallel experimentation by millions of entrepreneurs is the best and fastest way to do that. As Thomas Edison once said when trying to find the right combination of materials for a working lightbulb: "I have not failed. I've just found 10,000 ways that won't work." Multiply that by 10 million entrepreneurs and you can begin to see the scale of the economy's innovation potential.

This is especially important for robotics. It's obvious how robots make certain jobs obsolete -- e.g. driverless cars don't need drivers -- but it's less clear what new job opportunities they open up. We need to try different things.

Unfortunately, secondary liability creates problems for robot manufacturers who open up their products for experimentation. Ryan Calo explains this in more detail, but the basic problem is that, unlike computers, robots can easily cause physical harm. And under product liability law in most states, when there's physical harm to person or property, everyone involved in the manufacturing and distribution of that product is legally liable.

Ideally, we'd want something like a robot app store. But robot manufacturers would be unwilling to embrace commercial distribution of third-party apps if it increased their chances of being sued. There's evidence that Section 230's safe harbors (and, to some extent, the DMCA'ssafe harbors) play a key role in facilitating third-party content on the web. Absent a similar provision for robots, manufacturers are more likely to limit their liability by sticking to single-purpose robots or simply locking down key systems. That's fine, if we know exactly what we want our robots to do -- e.g. replace workers. But if we want robots to create jobs, it'd help to limit secondary liability for the robotics industry, open things up, and let widespread experiments happen freely.

from the let's-walk-through-the-reasons dept

There's been plenty of talk (and a ton of posts here on Techdirt) discussing both SOPA (originally E-PARASITE) and PROTECT IP (aka PIPA), but it seemed like it would be useful to create a single, "definitive" post to highlight why both of these bills are extremely problematic and won't do much (if anything) to deal with the issues they're supposed to deal with, but will have massive unintended consequences. I also think it's important to highlight how PIPA is almost as bad as SOPA. Tragically, because SOPA was so bad, some in the entertainment industry have seen it as an opportunity to present PIPA as a "compromise." It is not. Both bills have tremendous problems, and they start with the fact that neither bill will help deal with the actual issues being raised.

That main issue, we're told over and over again, is "piracy" and specifically "rogue" websites. And, let's be clear: infringement is a problem. But the question is what kind of problem is it? Much of the evidence suggests that it's not an enforcement problem and it's not a legal problem. Decades of evidence from around the globe all show the same thing: making copyright law or enforcement stricter does not work. It does not decrease infringement at all -- and, quite frequently, leads to more infringement. That's because the reason that there's infringement in the first place is that consumers are being under-served. Historically, infringement has never been about "free," but about indicating where the business models have not kept up with the technology.

Thus, the real issue is that this is a business model problem. As we've seen over and over and over again, those who embrace what the internet enables, have found themselves to be much better off than they were before. They're able to build up larger fanbases, and to rely on various new platforms and services to make more money.

And, as we've seen with near perfect consistency, the best way, by far, to decrease infringement is to offer awesome new services that are convenient and useful. This doesn't mean just offering any old service -- and it certainly doesn't mean trying to limit what users can do with those services. And, most importantly, it doesn't mean treating consumers like they were criminals and "pirates." It means constantly improving the consumer experience. When that consumer experience is great, then people switch in droves. You can, absolutely, compete with free, and many do so. If more were able to without restriction, infringement would decrease. If you look at the two largest contributors to holding back "piracy" lately, it's been Netflix and Spotify. Those two services alone have been orders of magnitude more successful in decreasing infringement than any new copyright law. Because they compete by being more convenient and a better experience than infringement.

Finally, even if you disagree with all of that, and believe that the problem is enforcement, SOPA and PIPA, won't be effective in dealing with that. The internet always has a way of routing around "damage" no matter how hard people try to stop it, and the approach put forth by these bills is a joke. It's hard to find anyone with technology skills who thinks that they will be effective. Every "blockade" has an easy path around it, and the supposed "anti-circumvention" rule in SOPA will never deal with the more obvious paths around things like DNS blocking (use a different DNS or a perfectly legal foreign VPN system). The private right of action efforts are also mistargeted. They're based on the premise that infringement is done for monetary reasons. It's amusing that just a few years ago, these same industries insisted that music and movie fans never wanted to pay anything any more, but now they're claiming that these same people are paying for cyberlockers all the time? That's simply not credible. And if there's so much money to be made, the studios and labels would be opening their own cyberlockers. Either way, we've watched this game of Whac-a-mole for over a decade. It doesn't work. Every site that is shut down leads to half a dozen new ones that spring up. This is not how you tackle a problem: by making the same mistake made over and over again in the past.

So... SOPA & PIPA don't attack the real problem, do nothing to build up the services that do solve the problem, and won't work from a technological standpoint. And that's just if we look at the what these bills are supposed to do.

The real fear is the massive collateral damage these bills will have to jobs, the economy and innovation.

The broad definitions in the bill create tremendous uncertainty for nearly every site online. This sounds like hyperbole, but it is not. Defenders of the bill like to claim that it is "narrowly focused" on foreign rogue infringing sites. Nothing could be further from the truth. While PIPA targets only foreign sites, the mechanism by which it does so is to put tremendous compliance and liability on third party service providers in the US. SOPA goes even further in expanding the private right of action to domestic sites as well. We've already seen how such laws can be abused by looking at how frequently false takedown claims are made under the existing DMCA. Of course, under the DMCA, just the content is blocked. Under SOPA all money to a site can be cut off. Under PIPA sites will just end up in court. Or, with both laws, an Attorney General can take action leading US companies to have to effectively act as network nannies trying to keep infringement from being accessible. None of this is good for anyone building a startup company these days. The massive uncertainty around this, combined with the need for a huge legal department sitting in "the garage" as a startup begins, will certainly slow down the pace of innovation in the US, while likely driving it elsewhere.

And the definitions are ridiculously broad. Under SOPA, you can be found "dedicated to the theft of US property" if the core functionality of your site "enables or facilitates" infringement. The core functionality of nearly every internet website that involves user generated content enables and facilitates infringement. The entire internet itself enables or facilitates infringement. Email enables or facilitates infringement. They have significant non-infringing uses as well, but the definition leaves that out entirely. Under SOPA, there's also a risk if you take "deliberate actions to avoid confirming a high probability" of infringement on a site. Of course, it's not at all clear how one takes deliberate actions to avoid taking action. The only way to read this clause from a tech company perspective is that it requires proactive monitoring, which is effectively impossible for a user generated content site. PROTECT IP's definitions are equally broad, again using the "enabling" or "facilitating" language.

The risk of these broad definitions on perfectly legitimate companies is not theoretical: Defenders of both bills continue to insist that they're only meant to deal with the worst of the worst. If that were really true, the definitions would be a lot tighter and a lot more specific. Even if this is the intention of the authors of both bills, the simple fact is that the very broad definitions in the bill, mean that any entrepreneur today will need to take significant compliance costs just to avoid the possible appearance of fitting the criteria.

Defenders also like to brush off the idea that a bill like this would target something like YouTube. But we know that's not accurate since Viacom is still engaged in a huge lawsuit against YouTube, in which Viacom's claims certainly appear to cover the definitions found in these bills. While it seems unlikely that anyone would try to shut down YouTube completely, given the public outcry it would create, the real fear is what happens to the next YouTube, or just the fear that a rights holder could strike into any company by threatening them under the private rights of action in each bill. It becomes a form of legalized extortion. Threaten to bring action under these bills, and watch tech companies crumble.

And, already there are indications that companies are interested in bringing broad actions for infringement against organizations that most people would consider perfectly legal. Advertising giant GroupM recently asked its entertainment industry customers to compile a list of "sites dedicated to infringement," not unlike what's found under PROTECT IP. Universal Music, Warner Bros. and Paramount were three key providers to that list, which ended up covering a large number of perfectly legitimate sites including the famed Internet Archive (widely recognized as the library for the internet). It also included numerous innovative startups that are frequently used by content creators to get their works out, such as SoundCloud and Vimeo. Even more worrisome, it included a variety of publications and blogs, including Vibe Magazine, the quintessential hip hop and R&B magazine founded by Quincy Jones, as well as Complex, a popular lifestyle magazine recently recognized as one of the most valuable startups in New York.

Even worse, it appears that Universal Music also included the personal website of one of its own top artists, 50Cent. The hiphop star has a personal website as well as a website owned by Universal Music. The personal website is much more popular... and it appeared on the infringement list. Suddenly, you can see how letting companies declare what sites are dedicated to infringement can lead to them looking to stifle speech and competition.

Similarly, Monster Cable, who has stated its support for PROTECT IP, has put together its own list of "rogue sites" and it, rather stunningly, includes sites like eBay, Craigslist, Costco and Sears. It even includes consumer rights groups like Which? in the UK, and various popular shopping search engines like PriceGrabber.

These companies clearly take an expansive view of what constitutes "dedicated to infringement," and have no problem suggesting they would like to stop these sites. Internet companies and site owners have every right to be extremely afraid of what laws like PIPA and SOPA would do when they give much more power to these private companies to take actions that could shut down these sites, tie them up in court or merely cut off their funding and advertising.

That uncertainty has very real and quantifiable effects on jobs in this country. President Obama has noted that the internet adds approximately $2 trillion to the annual GDP (pdf). The amount of jobs created by the tech industry are massive, and represent a large percentage of all new job creation today. IDC has predicted 7.1 million new jobs and 100,000 new businesses created in the next four years from the tech sector. An astounding 3.1 million people are employed thanks to internet advertising -- jobs that simply did not exist a decade ago.

And these jobs go way beyond just the jobs at tech companies themselves. The important thing in tech platforms is not in how many jobs are at those companies, but how many jobs they enable elsewhere. eBay has been said to have empowered 750,000 people to build their own small businesses. Facebook's app platform has, by itself, created somewhere around 200,000 new jobs (pdf). It's likely that Apple's iOS app platform has created significantly more than that, given how popular it is. Google's tools have been shown to create $64 billion (with a b) in additional economic activity.

Do we really want to stifle all of that growth and activity with regulations that will stifle innovation and jobs, even (as noted above) as the evidence shows that merely adapting and providing a better service makes everyone better off?

That uncertainty has extreme and quantifiable effects on investment in new startups. A very detailed look at the uncertainty in the cloud computing space, prior to and after the decision in the Comedy Central v. Cablevision case, which effectively set the framework for the legality of cloud computing, showed much greater investment when the law was clarified to be in favor of letting these new services thrive. Take that away, and investment in this engine of growth likely would be much lower. Considering that politicians claim to be so concerned about the economy and jobs these days, the idea that they would push forth a bill that quantifiably would reduce investment in one of the only sectors creating new jobs is really stunning.

Broadly expanding secondary liability is a dream for trial lawyers, but will be a disaster for business. There's been a move, associated with these bills to somehow demonize important concepts of safe harbors from secondary liability. The suggestion is that secondary liability somehow "allows" bad activity. Nothing is further from the truth. Illegal activity is still illegal. The point of safe harbors from secondary liability is blaming the party actually doing the action that breaks the law. We don't allow people to sue AT&T because the telephone was used in commission of a crime and we don't sue Ford because someone crashed their pickup truck into another car. Liability should be properly applied to the parties doing the action that breaks the law. The safe harbors have just made that clear -- and allowed innovation to flourish. Empirical studies have pointed out that "the rich informational ecosystem we know today... is a function of the 'breathing space' Internet intermediaries currently have under the law."

The key way that both PIPA and SOPA function are to drastically scale back that breathing space, by attaching secondary liability and compliance costs to US companies, in an attempt to keep users from infringing via other sites. That would represent a massive shift in the legal framework that has allowed the internet to flourish, and yet no research or studies have been done to look at the possible impact of all of this.

The technical measures described in both bills is tremendously problematic. Looking to use DNS blocking is just a bad move. It's why a group of core internet infrastructure experts spoke out very early on (about COICA, in the pre-PIPA days) to explain how DNS blocking would set back a decade or more's worth of work on online security standards, would make people less safe online, and has the risk of fragmenting the internet. It's why the founder of the world's largest independent DNS provider, OpenDNS, in charge of protecting one-third of all schools in the US, has noted that under these laws, he likely wouldn't have started the company, or might have started it in another country.

Having a judge determine the best network architecture is a bad idea. SOPA's attempt to address the "DNS blocking doesn't work" argument by adding a vague standard in which courts can order sites to take "reasonable measures" to block even more is also not encouraging. Does anyone really think that we want some judges determining what are "reasonable measures" for managing how the internet works? Wouldn't it be better to trust the long line of experts, drop any thought of DNS blocking, and move on?

Going down the slippery slope of censorship is fraught with peril, both domestically and abroad. Supporters of the law get angry any time people bring up censorship, but as law professor Derek Bambauer has made clear, any effort to block content is a form of censorship. What we can argue is whether or not this form of censorship makes sense or is a policy that people think makes sense. But no one should deny that bills that lead to blocking access to websites is a form of censorship.

There is reasonable debate as to whether or not this level of censorship goes violates the First Amendment. Constitutional scholar Laurence Tribe has argued that it does violate the First Amendment. Well over 100 of the country's top legal scholars have made the same argument. Arguing on the other side is well respected First Amendment lawyer Floyd Abrams... but even he admits that under SOPA and PIPA protected speech would get censored. He just deems that as acceptable collateral damage, as being merely "incidental." We can argue over whether or not it really is incidental, as we've already seen actions against sites under current law that seek to stifle large amounts of protected speech outside of any infringement.

The functional setup of such site blocking -- via DNS blocking -- is effectively identical to how the Great Firewall of China works. While the intended purpose is obviously different, the actual mechanism for blocking is nearly identical. This creates significant cover for repressive regimes to resist any diplomatic efforts by the US to push back against attempts by the US to promote internet freedom. Furthermore, we have seen how countries, such as Russia, have used copyright law to censor political opposition, using the law to go against activists challenging the government. Even if the intended purpose of SOPA and PIPA are to protect against infringement, opening up the door to censorship for one purpose makes it nearly impossible to avoid it being used for other purposes. It also basically gives the perfect blueprint for repressive regimes. They merely need to claim that their Great Firewalls are designed to stomp out infringement, and then can use it to intimidate and block political opponents. Adding to that is the massive expansion of the diplomatic corp. pushing for greater enforcement, and it's almost as if we're begging countries to set up their own Great Firewalls that will certainly be abused.

Countries abroad are watching us, and already noting the seeming hypocrisy concerning our statements. Media in other countries, who already are known for suppressing speech and censoring the internet, are already mocking the US for even considering such legislation at the same time as the US State Department claims to be promoting internet freedom. Talking about the importance of internet freedom on the one hand, while pushing countries to put in place the very tools that will be used to undermine internet freedom is not a particularly consistent message. This can be seen in VP Joe Biden's recent speech on internet freedom that presents all the arguments for why SOPA and PIPA should not be supported (in an unintended manner).

Changing what counts as a felony for copyright, without understanding the implications or common usage of technology puts many at risk. This does not apply directly to PIPA, but its companion legislation in the Senate, S.978. Similar provisions are found in SOPA as well, making certain forms of "streaming" a felony. Supporters of these actions insist that they're merely harmonizing criminal and civil copyright laws, since the felony parts of the criminal copyright statute cover reproduction and distribution, but not performance. What they fail to recognize (or admit) is that there's a reason why performance rights were left out, and it's because it's pretty ridiculous to think of a felony performance in normal contexts. But it becomes even more troublesome in the online context, because "performance" is so vaguely defined in an era when streaming works via a simple one-line embed. To embed a video is no different -- from a technical standpoint -- from linking to a video. And most people would have significant problems with the idea that you could face five years in jail for merely linking to content you have no control over. Yet, the streaming portions of SOPA and of S.978 make that entirely possible. Merely putting a single line of code on a site, pointing to content on another server that you have no control over, potentially makes you a felon. This will have massive unintended consequences and puts at risk millions of Americans who embed videos all the time.

To be honest, there are many, many more problems hidden down within the specifics of the bill, but this post was already getting long enough. However, what we have is a bill that doesn't tackle the real problems at all, that won't solve the problem it thinks it's facing, and has massive unintended consequences. Why? Well, because the entertainment industry insists that it's in trouble. This is the same entertainment industry who has been claiming the same thing about every technological innovation ever. If they'd had their way in the past, there would be no radio, no cable TV, no VCR, no TiVo and no iPods. Do we really trust them now to create a "narrowly focused" law that will only target the really bad behaviors? We'll close it out with a few quotes from the entertainment industry over the last century discussing various technological innovations, and question why we're letting them drive PIPA and SOPA forward:

The Player Piano

“I foresee a marked deterioration in American Music…and a host of other injuries to music in its artistic manifestations by virtue – or rather by vice – of the multiplication of the various music reproducing machines” -- John Philips Sousa, 1906

The Video Cassette Recorder

"But now we are faced with a new and troubling assault on our fiscal security, on our very economic life, and we are facing it from a thing called the Video Cassette Recorder" -- MPAA President Jack Valenti in 1982

Cassette Tapes

"When the manufacturers hand the public a license to record at home...not only will the songwriter tie a noose around his neck, not only will there be no more records to tape, but the innocent public will be made accessory to the destruction of four industries" -- ASCAP, 1982

Digital Audio Tape

The Mp3 Player

“Diamond's product Rio was destined to undermine the creation of a legitimate digital distribution marketplace..." -- RIAA President Hillary Rosen in 1998

The Digital Video Recorder

"It's theft...Any time you skip a commercial or watch the button you're actually stealing the programming." Turner Broadcasting CEO Jaime Kellner in 2002